New Delhi: In a landmark financial development, the Reserve Bank of India (RBI) has approved a record surplus transfer of ₹2.69 lakh crore to the central government for the fiscal year 2024-25. This unprecedented dividend, announced during the RBI's Central Board meeting chaired by Governor Sanjay Malhotra, marks a significant 27.4% increase from the previous year's transfer of ₹2.1 lakh crore.

The substantial dividend is attributed to the RBI's robust earnings, primarily driven by:

Foreign Exchange Operations: Profits from the sale of US dollars and gains from foreign exchange reserves have significantly bolstered the RBI's income

Interest Income: A consistent rise in interest income from both domestic and international investments has contributed to the surplus.

These factors collectively enhanced the central bank's financial performance, enabling such a large dividend distribution.

The record dividend provides the central government with additional fiscal space, aiding in efforts to reduce the fiscal deficit to 4.4% in the current fiscal year . This infusion of funds is expected to support public expenditures and meet fiscal targets, offering a buffer against potential revenue shortfalls.

In tandem with the dividend announcement, the RBI has revised its Economic Capital Framework, increasing the Contingent Risk Buffer (CRB) to 7.5% from the previous 6.5%. This move reflects a prudent approach to risk management, ensuring financial resilience amid global and domestic uncertainties.

The RBI's decision to transfer a record ₹2.69 lakh crore to the central government underscores the central bank's strong financial health and its commitment to supporting the nation's economic stability. This significant surplus not only strengthens government finances but also highlights the effective monetary management strategies employed by the RBI.